Fawkner VIC Property Investment

## 1. Investment Verdict We recommend a Hold strategy for Fawkner, VIC, with the single most important number justifying this decision being the Investment Scorecard rating of 59.0/100. This score indicates a neutral outlook, suggesting that while Fawkner has some attractive features, it also has areas that need improvement.

## 2. Market Overview The median house price in Fawkner is $876,000, while the median unit price is $670,000. Over the past year, house prices have grown by 9.3%, and the 5-year compound annual growth rate (CAGR) is 4.9%. The market is currently in a cooling cycle, which may signal a more favorable environment for buyers. However, with a high owner-occupier rate of 66%, sellers may still find willing buyers. The rental demand is high, which could support price growth, but the lack of data on days on market makes it difficult to determine the current balance between buyers and sellers.

## 3. Rental Market The vacancy rate in Fawkner is 2.2%, indicating a relatively tight rental market. The median weekly rent is $570, which translates to a gross rental yield of 3.4%. This yield is comparable to other suburbs in the area, such as St Albans (3.5%) and Noble Park (3.5%). The high rental demand and low vacancy rate suggest that investors may find it relatively easy to secure tenants, but the yield may not be high enough to justify the investment solely based on rental income.

## 4. Short-Term Rental Opportunity Unfortunately, there is no data available on the short-term rental market in Fawkner, including nightly rates and occupancy. Without this information, it is difficult to estimate the potential revenue from short-term rentals or compare it to the long-term rental market. As a result, we cannot recommend a short-term rental strategy for Fawkner at this time.

## 5. Infrastructure & Growth Drivers Fawkner benefits from its well-connected inner-city location, with several major infrastructure projects underway or announced, including the Melbourne Airport Rail (SRL Airport), North East Link, and West Gate Tunnel. These projects may drive demand for housing and rentals in the area, potentially supporting price growth. The suburb's population is 14,274, and the unemployment rate is 7.9%, which is slightly higher than the national average. However, the low supply pipeline, with price growth outpacing new supply, may contribute to upward pressure on prices.

## 6. Bull Case If the current market conditions hold or improve, the upside scenario for Fawkner is promising. With a 3-year growth forecast of 13.1%, investors may see significant capital appreciation. Additionally, the high rental demand and low vacancy rate could support rental income growth, making Fawkner a more attractive investment opportunity. If the infrastructure projects are completed as planned, they may further drive demand and support price growth, potentially leading to higher yields and greater returns on investment.

## 7. Risks While no significant risk factors have been identified for Fawkner, there are some potential risks to consider. The unemployment rate of 7.9% is higher than the national average, which may impact rental income and vacancy rates. However, the low supply pipeline and high rental demand may mitigate this risk. Additionally, the lack of data on days on market makes it difficult to assess the current market balance and potential risks. The flood risk and bushfire risk are both classified as LOW, according to the state planning portal overlay, which reduces the risk of environmental disasters impacting the property.

## 8. The Play For investors considering Fawkner, we recommend entering the market with a neutral outlook, targeting a minimum yield of 3.4% to ensure a reasonable return on investment. Watch signals include changes in the rental market, infrastructure project updates, and shifts in the local economy. The recommended strategy is to Hold, as the current market conditions do not strongly favor buying or selling. Investors should carefully consider their investment goals and risk tolerance before making a decision.

This analysis is for informational purposes only and does not constitute financial, legal, or investment advice. Seek professional advice before making investment decisions.